Tongzhou Market Information Brief, Week 3 of June 2021
I. US Cotton
Positive Factors:
1) Global economic data has reached a new high since 2008, suggesting further room for upward adjustment in global cotton consumption in the 2021/2022 season.
2) The price ratio of cotton/soybeans and corn is at a historical low point, which is not conducive to increasing cotton planting area in various countries.
3) The downstream cotton industry chain in China and Southeast Asia is improving, with strong orders leading to a continuous increase in cotton replenishment demand.
4) Indian cotton prices continue to rise, narrowing the price difference between US and Indian cotton and raising the bottom of global cotton prices.
5) The market's assessment of the US cotton planting area is relatively low, and the planting area report at the end of the month may show a year-on-year decrease in planting area.
Negative Factors:
1) The Federal Reserve's interest rate meeting hinted at the possibility of two interest rate hikes in 2023, increasing market concerns about the Fed's early start to the interest rate hike/balance sheet reduction channel.
2) The progress of US planting is accelerating, and the good rate is improving; the Indian monsoon is expected to be relatively stable, and Australia's water reserves continue to improve, which is conducive to the stability/increase of global production in the 2021/2022 season.
3) The spread of the Indian virus globally has, to some extent, suppressed cotton demand.
II. Zhengzhou Cotton
Positive Factors:
1) Global economic data has reached a new high since 2008, suggesting further room for upward adjustment in global cotton consumption in the 2021/2022 season.
2) Cotton yarn mills continue to have high profits and have a desire to replenish inventories at lower prices, supporting cotton prices.
3) The Indian epidemic and the blockade in Bangladesh have led to a certain amount of return of foreign orders.
4) Due to abnormal weather during the planting season and a decrease in the planting area in Xinjiang, the market estimates that production will most likely decrease year-on-year.
Negative Factors:
1) Weaving mills have seen an accumulation of finished goods inventory, a decrease in operating rate, and an increase in yarn mill finished goods inventory, indicating some signs of off-season in downstream industries.
2) Commercial cotton inventories remain relatively large, coupled with expectations of reserve releases, the market does not lack cotton.
3) The price difference between domestic and foreign markets is large, and the demand for imported cotton and yarn has increased significantly, further increasing domestic supply pressure.
• Core Logic:
1) With the price difference between domestic and foreign markets above the sliding scale tariff resulting in substantial profits, there is an industry return driver, mainly from January to December.
2) The decline is supported by downstream industries, and the rise is under pressure from inventories. In the long term, there is a driver of improving global economy, while in the short term, there is pressure from concerns about tighter global liquidity. However, the overall conditions for a macroeconomic trend decline are not established, and the unilateral strategy remains primarily buy-on-dips, but the inventory problem suppresses the height of cotton prices.
• Variables to Watch: Fiscal and monetary policies of various countries, production variables caused by weather, downstream industry tracking, and reserve release policies
Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance
On March 3, Wang Yongqing, Vice President of Xiamen CNOOC Group, visited Tongzhou Group for investigation and guidance. Wei Gangmin, Chairman of our company; Huang Hongyu, President; Li Tao, Vice President; and Zhang Zhiyan, Director of the General Office, met with and participated in a symposium.
Tongzhou Cotton Market Brief, Week 1 of March 2025
1) This week's National People's Congress and the Chinese People's Political Consultative Conference (NPC & CPPCC) in China boosted market expectations for steady growth. In February, the Purchasing Managers' Index (PMI) for manufacturing stood at 50.2%, up 1.1 percentage points from the previous month, indicating a significant improvement in the manufacturing sector.
In 2024, China's dyeing industry saw rapid export growth to ASEAN and RCEP member countries, exceeding the overall export growth rate. However, this growth was accompanied by a decline in prices. From January to December, China's exports of eight major dyeing products to ASEAN totaled 7.908 billion meters, a year-on-year increase of 12.14%, 4.61 percentage points higher than the overall export growth rate, accounting for 23.58% of total exports. The average export price was US\$1.19 per meter, a year-on-year decrease of 2.75%, 0.64 percentage points lower than the overall decline. Exports to RCEP member countries totaled 8.431 billion meters, a year-on-year increase of 11.35%, 3.82 percentage points higher than the overall export growth rate. The average export price was US\$1.17 per meter, a year-on-year decrease of 2.79%, 0.60 percentage points lower than the overall decline.
On February 28, Mr. Huang Hongyu, President of our company, was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference and, as a guest speaker at the "Xiangshan Roundtable," shared his views on the cotton market and trading opportunities.
Henan Tongzhou Cotton Industry Co., Ltd.
Contact
Henan Tongzhou Cotton Industry Co., Ltd.
Address: 10th Floor, Henan Nongxin Building, No. 19 Commercial Outer Ring Road, Zhengdong New District,Zhengzhou, China
Tel：86037165836206
Email：tongzhou@tongzhoucotton.com
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